NHL dispute puts sales for small businesses on ice

By JOYCE M. ROSENBERG, AP Business Writer

Wednesday, October 24, 2012

NEW YORK (AP) — In cities with professional hockey teams, it seems that the only thing on ice these days is sales — at least at the bars, restaurants and other small businesses that cater to sports fans.

Bars and restaurants normally filled to capacity in St. Paul, Minn. on nights when there’s a Minnesota Wild game have empty tables. An impasse between the National Hockey League and the NHL Players’ Association has resulted in games being canceled at the nearby Xcel Energy Center. That means fewer people are coming into town.

Business at the Great Waters Brewing Co., a brewpub located near the Xcel Center, is down 20 percent since the start of the lockout. For owner Sean O’Byrne, it’s a painful reminder of the 2004-05 lockout that wiped out the entire NHL season. But he says the current dispute, which so far has resulted in games being canceled through Nov. 1, is harder because small businesses like his are still recovering from the recession.

“The economic times are different now, and I think the one thing that’s become apparent to me is the sort of ripple effect the hockey strike has,” he says. “It’s not just the bars and restaurants, it’s the local food vendors and their suppliers.”

Strikes and lockouts in major sports leagues — whether it’s this year’s NHL lockout, last year’s National Basketball Association lockout or baseball and football strikes of the past — can have a devastating effect on small businesses that cater to sports fans. When 18,000 fans don’t stream into a downtown arena on a game night, restaurants and bars have far fewer people to serve and parking lots can sit empty. There are fewer shoppers in downtown stores. It’s particularly painful in a town like St. Paul or Pittsburgh, where there’s no NBA team to help make up for the losses. And it’s tough for a business still being hurt by a weak economy.

A PRECARIOUS POSITIONSo far, the NHL has canceled 135 games through Nov. 1. Each team plays 42 home games. The impact of the lockout stretches across 30 teams in U.S. cities including Nashville, Tenn., Los Angeles, and Raleigh, N.C. Twenty-three of the teams are in the U.S. and the rest are based in Canada.

In Pittsburgh, each canceled game at the Consol Energy Center is estimated to cost the city $2.2 million, says Craig Davis, president of VisitPittsburgh, the city’s tourism office. That amount includes tickets and food sales at the arena, spending at restaurants and bars, hotel rooms and parking. Not all of that money is lost by small businesses — many hotels, for example, are owned by big corporations. And downtown Pittsburgh hosts conventions during the fall, which helps mitigate some of the financial damage.

Still, for small companies that benefit from having a hockey team nearby, the timing couldn’t be worse.

“Businesses are coming out of the worst six years in the economy and so they’re already in a precarious position,” says St. Paul Mayor Chris Coleman. “They’re completely dependent on 42 days of hockey to make their year.”

St. Paul and nearby Minneapolis are big hockey towns. The previous NHL team, the North Stars, played in nearby Bloomington until they moved to Dallas in 1993. The Wild began playing in 2000. And the University of Minnesota team has many local fans. St. Paul businesses had particularly high hopes for this season because the Wild recently acquired two big stars, forward Zach Parise and defenseman Ryan Suter, Coleman says.

“It’s a double whammy, the anticipation was so great that coming out of a recession, this was going to be a really good year for us,” he says.

Some business owners changed their approach after the 2004-05 lockout, says Matt Kramer, president of the St. Paul Chamber of Commerce. One strategy many owners have adopted is to increase their marketing efforts to nearby businesses to expand their customer base, he says.

“A lot of people who saw that lockout as unbelievable and painful said, `we’ll never put ourselves in a position again where we’re dependent on a single business,”’ Kramer says. “People have tried to be a little more careful about saying, `we’re a hockey bar.”’

An owner who can’t escape his connection to hockey is Tom Reid, a former North Stars defenseman who owns Tom Reid’s Hockey City Pub, located two blocks from the Xcel Center. Reid says his business is down 70 percent on nights when hockey games were scheduled.

The lockout means Reid has no need for his usual contingent of 30 to 35 servers. Right now he has six.

“We’ve trained some people, but we can’t bring them in until we have the business to support it,” he says.

SOME LOSSES, SOME GAINSIt’s true that many small businesses will suffer because of the lockout, but other local businesses stand to gain from it, says Allen Sanderson, a lecturer at the University of Chicago whose specialties include the economics of sports. If there are no hockey games, fans will find some other form of entertainment.

“If my wife and I decide to go to a (Chicago) Black Hawks game and we can’t, we’ll go to a mall or a movie or the symphony. We’ll just spend the money somewhere else,” he says.

But for Kevin Joyce, who owns The Carlton, an upscale restaurant near Pittsburgh’s Consol Center, the lack of Penguins games hurts his business.

“This is really devastating. It’s very disheartening to have gone through this eight years ago and go through it again,” Joyce says. The last few months of the year and the first quarter are the busiest season for his restaurant, but business is so slow that on some nights, he has only four servers. On hockey nights, he might have as many as 12.

Joyce says the fine dining business was difficult even before the 2004-05 lockout, which he estimates cost him $150,000 in revenue. He says the 2001-02 recession, the Sept. 11, 2001, terror attacks and this last recession have posed a series of challenges for The Carlton. Joyce says the restaurant is subsidized by a takeout business he and his wife own, Eadie’s Kitchen & Market.

“It’s a very difficult environment. ... I haven’t been able to give raises to my salaried employees for several years,” Joyce says. He used to have three managers working with him. Now he has one.

Retailers who sell hockey-themed clothing and gifts are also experiencing a sales dip. Sales of Penguin merchandise is down between 20 percent and 30 percent at The Pittsburgh Fan, according to Eric Castellucci, the company’s online marketing manager. The Pittsburgh Fan also has a store in town, near PNC Park, where baseball’s Pirates play.

The Pittsburgh Fan has cut prices on Penguin gear by 35 percent to get fans interested in buying. “It would have been a lot better had the Penguins been playing,” Castellucci says.

Businesses in cities where there are multiple sports teams are having an easier time — for now.

At the Fireside Bar & Grille, a sports bar in the Philadelphia suburb of Ambler, owner Pete Penna says business isn’t being hurt by the absence of Flyers games. The baseball playoffs are still drawing people even though the Phillies’ season is over. Philadelphia is also a big football town, with the Eagles and college teams from Temple and Villanova. And the Philadelphia 76ers are playing again now that pro basketball is back. Penna’s 17 TV screens have plenty of sports to keep customers coming in.

Still, the NHL lockout will become a problem if it stretches out into the winter.

“The Flyers account for a good 20 to 30 percent of our bar business in January, February and March. If there’s no hockey by then, it will have an impact,” Penna says.